Shared Flashcard Set

Details

Financial Accounting
ch. 1 - 3
18
Accounting
Undergraduate 3
09/14/2011

Additional Accounting Flashcards

 


 

Cards

Term
What is the primary objective of financial accounting?
Definition
serving external users by providing them with general-purpose financial statements
Term
Principles of Accounting (4)
Definition
1. Measurement or Cost
2. Revenue Recognition
3. Expense Recogntion or Matching
4. Full Disclosure
Term
Measurement Principle
Definition
aka Cost principle, accounting information is based on actual cost.
Term
Revenue Recognition Principle
Definition
provides guidance on when a company must recognize (record) revenue.
Term
Expense Recognition Principle
Definition
aka matching principle prescribes that a company record the expenses it incurred to generate the revenue reported.
Term
Full Disclosure Principle
Definition
prescribes that a company report the details behind financial statements that would impact users decisions.
Term
Assumptions of Accounting (4)
Definition
1. going-concern
2. monetary unit
3. time period
4. business entity
Term
Going-Concern Assumption
Definition
accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
Term
Monetary Unit Assumption
Definition
we can express transactions and events in monetary, or money, units.
Term
Time Period Assumption
Definition
presumes that the life of a company can be divided into the periods, such as months and years, and that useful reports can be prepared for those periods.
Term
Business Entity Assumption
Definition
means that a business is accounted for separately from other business entities, including its owner. The reason for this assumption is that separate information about each business is necessary for good decisions.
Term
3 legal forms of business entity assumption
Definition
1. proprietorship
2. partnership
3. corporation
Term
What is the group in the private sector responsible for U.S. GAAP?
Definition
Financial Accounting Standards Board (FASB)
Term
How does the accounting process begin?
Definition
Identifying select transcations and events
Term
What is a double entry accounting system?
Definition
1. at least two accounts are involved, with at least one debit and one credit.
2. the total amount debited must equal the total amount credited.
3. the accounting equation must not be violated.
Term
What is the principle that requires that expenses be reported in the same period as the revenues that were earned as a result of the expense?
Definition
Expense Recognition or Matching Principle
Term
How and where do we INTIALLY record unearned revenue?
Definition
credit to unearned revenue
Term
Once we have made the required adjustments, what is the next trial balance referred to as?
Definition
adjusted trial balance
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